Are theaters and streaming rivals—or a growing hybrid ecosystem?

The news: The battle between streaming platforms and traditional theaters is reaching a critical inflection point this holiday season, with both sides adapting their strategies for a changing marketplace.

• “Moana 2” has dominated theaters with $300 million in 12 days.
• Amazon's "Red One," originally planned as a streaming release, has surprisingly earned $164 million globally in theaters.

Why it matters: Rather than pursuing pure box office dominance, streamers like Amazon Prime Video and Netflix are using theatrical releases to build awareness for their streaming services. This approach makes sense given consumer preferences: 72% of streaming subscribers prioritize content quality when choosing a service, followed by price (63%) and content volume (48%).

Conjuring a hit: Irrespective of the channel, how to launch a successful film keeps evolving.

• Movie theaters still rely heavily on TV advertising, with 51% of Canadian and 47% of US adults noting it as their primary source for movie promotions—but social media is closing the gap.
• Content discovery habits further highlight this shift. While 58% of adults choose new shows or movies based on friends' recommendations, online reviews (38%) and TV commercials (33%) remain significant influences.
• Streaming platforms have addressed these trends by emphasizing social media and online buzz, both cited by 32% of global respondents as key discovery tools.

Meanwhile, streaming services are also blurring traditional lines by strategically releasing some films in theaters before streaming, aiming to capture both box office revenues and awards consideration—but this approach has its challenges. Apple recently pulled back from its in-theater strategy after repeated flops.

Theaters are responding by enhancing the in-person experience through renovations and improved amenities. The theatrical atmosphere, particularly during holiday seasons, maintains its unique appeal despite streaming's convenience and cost advantages. But with streaming TV ad revenues forecasted to grow 19.3% in 2025 according to a new GroupM report, the pressure on theaters to innovate will intensify.

Our take: Rather than replacing theaters, streaming is creating a new ecosystem where both formats can potentially thrive.

The future likely holds more experimentation with hybrid release strategies and marketing approaches. While streaming platforms capitalize on their digital-first advantages, theaters must balance maintaining their traditional appeal while adapting to changing consumer preferences—and continue to deliver value to the streamers that count on their high-value content.

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